Northwest Developments Limited v Zhang
[2020] NZHC 1151
•28 May 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2017-404-936
[2020] NZHC 1151
BETWEEN NORTHWEST DEVELOPMENTS LIMITED
PlaintiffAND
CHENG ZHANG, JIN KUK JUNG and PILL SOON SO
Defendants
AND
SANLI HOMES LIMITED and SANLI GROUP LIMITED
Third Parties
Continued …
Hearing: 17, 18, 19, 20, 21, 24, 25 and 26 February 2020 (further
submissions on 4 March 2020)
Appearances:
M J Fisher and J J Yoon for the Plaintiff in CIV-2017-404-936 J Burley and S Pala for the Defendants in both proceedings
K J Crossland and J K Boparoy for the Third Parties in CIV-2017- 404-936 and the Plaintiffs in CIV-2017-404-980 (excused from 21 February 2020)
Judgment:
28 May 2020
JUDGMENT OF GAULT J
This judgment was delivered by me on 28 May 2020 at 3:30 p.m. pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………………
NORTHWEST DEVELOPMENTS LTD v ZHANG, JUNG and SO [2020] NZHC 1151 [28 May 2020]
Continued …
CIV-2017-404-980 BETWEEN
SANLI HOMES LIMITED and SANLI GROUP LIMITED
Plaintiffs
AND
CHENG ZHANG, JIN KUK JUNG and PILL SOON SO
Defendants
[1] These two proceedings concern a three-way dispute in a subdivision development known as the Huapai Triangle, an area comprising approximately 65 hectares of land on the south side of State Highway 16 near Huapai in west Auckland.
[2] In broad terms, the two sets of issues raised in the proceedings relate to liability for infrastructure costs and consequential loss incurred by Northwest Developments Ltd (Northwest),1 and responsibility for the failure to settle an agreement for sale and purchase between the defendants and Sanli Homes Ltd or Sanli Group Ltd (together Sanli).2
[3] Some disputed issues have already been determined in other proceedings,3 and the outstanding issues have further narrowed during the trial.4 The remaining issues between Northwest and the defendants concern liability for contractual interest on the infrastructure costs, and claims for consequential loss and solicitor client costs. It is still necessary to set out the background circumstances in some detail.
Parties
[4] Northwest is a land development company. It is the owner of the property at 81 Nobilo Road, approximately 6.3 hectares in the south-eastern corner of the Huapai Triangle. Northwest’s claim against the defendants is brought under an agreement known as the Five Owners’ Agreement dated 23 June 2015.5 Northwest became an assignee of that agreement following its purchase of 81 Nobilo Road.
[5] The defendants, Mr Zhang, Mr Jung and Ms So, are the owners of the property at 77 Nobilo Road, approximately 7 hectares in the north-eastern corner of the Huapai Triangle.6 Mr Jung and Ms So are married and own a half share in the property. Mr Zhang, a business partner of Mr Jung’s, owns the other half share. Mr Jung speaks Korean and gave evidence with an interpreter. Mr Zhang speaks Cantonese and gave evidence with an interpreter. Ms So did not give evidence.
1 The plaintiff in CIV-2017-404-936.
2 Third parties in CIV-2017-404-936 and plaintiffs in CIV-2017-404-980.
3 See [34] and [37] below.
4 See [39] and [40] below.
5 In full, the Huapai Triangle 5 Landowners Infrastructure Agreement. See [10] below.
6 Approximately 7.5 hectares before the subdivision and 7.1 hectares afterwards, as a result of a road strip transferred to the Council.
[6] Sanli agreed to purchase 77 Nobilo Road from the defendants in 2016, but settlement of that sale and purchase had still not occurred before trial.
Factual background
[7] The Huapai Triangle is a Special Housing Area under the Housing Accords and Special Housing Areas Act 2013. In 2013 several landowners in the Huapai Triangle, including Northwest’s predecessor in title and the defendants, decided to combine together to apply for a variation to the District Plan for the Huapai Triangle. This envisaged an application to rezone the Huapai Triangle from future urban to residential zoning to enable subdivision developments to be undertaken. They entered into the Huapai Triangle agreement dated 25 November 2013.7
[8] On 17 October 2014 the defendants exercised their right to withdraw from the Huapai Triangle agreement on the basis that what was proposed in the plan was compromising the subdivision of their land because a substantial portion was not able to be zoned for mixed housing given its propensity for flooding.
[9] Subsequently, the remaining parties to the Huapai Triangle agreement applied to Auckland Council for the proposed plan change as contemplated in the agreement. Having withdrawn from the Huapai Triangle agreement, the defendants initially opposed the plan change but over subsequent months negotiated with other landowners to change the proposed plan. A revised plan was prepared, which reduced the size of the stormwater pond on the defendants’ land and so would enable the defendants to use a larger portion of their land for mixed housing. The negotiations culminated in the Five Owners’ Agreement.
[10] On 23 June 2015, the five groups of landowners of the eastern portion of the Huapai Triangle, including Northwest’s predecessor in title and the defendants, entered into the Five Owners’ Agreement. This agreement set out the basis upon which those parties would collaborate and share costs to effect a private plan change in respect of the Huapai Triangle. They would co-operate with each other in respect of,
7 This agreement may not have been finally executed until April 2014, but nothing turns on the timing or terms of this early agreement.
and would contribute to the costs of, infrastructure (including roading, a pedestrian/cycling overbridge and water and wastewater reticulation) that was required to be installed to service their properties if the plan change was approved. The agreement provided for reimbursement of these costs within one month of notification or at the latest on or before settlement of any transfer of the land. It included reciprocal granting of easements but also prohibited the lodging of caveats. It also provided in clause 58 that the rights and obligations of each party were to be assigned or transferred to any successor in title and required parties to cause a successor in title to enter into a new agreement with the other parties on the same terms or a deed of novation so that the successor in title is bound on the same terms.
[11] Meanwhile, on 6 May 2015, Northwest entered into an agreement to purchase 81 Nobilo Road from the then owners, who were parties to the 2013 agreement. The sale and purchase agreement provided for settlement on 5 September 2016. The agreement provided that the vendor would continue to progress the plan variation application and enter into agreements as agent for the purchaser, and that the benefit of all agreements (and obligation of all disclosed agreements) would pass to the purchaser on settlement.
[12] The Five Owners’ Agreement was executed after Northwest’s sale and purchase agreement was signed but before it settled. Northwest’s vendors, rather than Northwest, were parties to the Five Owners’ Agreement but Northwest was involved in its preparation and the defendants now accept that Northwest became an assignee.8
[13] On 13 November 2015, Auckland Council notified its approval of the application for the plan change. Northwest began the process of obtaining the consents required for its proposed subdivision development on 81 Nobilo Road.
[14] In April 2016 the defendants and other landowners consented to Northwest’s subdivision development.
8 This was determined in separate proceedings: Northwest Developments Ltd v Zhang [2018] NZHC 1736, upheld in Zhang v Northwest Developments Ltd [2019] NZCA 137, (2019) 20 NZCPR 638. See [34] and [37] below.
[15] Around May 2016, Northwest entered into agreements with a large number of purchasers for the sale and purchase of lots or sections in its proposed subdivision. Settlement of these agreements was to take place 10 or 20 working days after Northwest gave notice to the purchaser that title had issued.
[16] On or around 6 May 2016 the defendants agreed to sell 77 Nobilo Road to Sanli. Under the agreement, settlement was to take place on 8 May 2017. This sale and purchase agreement was unconditional and contained no provision for assignment or transfer of the defendants’ rights and obligations under the Five Owners’ Agreement nor for Sanli to enter into a new agreement with the other parties to the Five Owners’ Agreement or a deed of novation.
[17] Around the time of the 6 May 2016 agreement, Northwest learned of the defendants’ proposed sale but not the detailed terms nor even that the purchaser was Sanli. Mr Sun of Northwest was aware that Mr Gerry Li and Ms Amy Yao became involved in development discussions for the purchaser. From around that time, the defendants ceased being involved in the development discussions.
[18] In early June 2016, Northwest obtained resource consent for its proposed subdivision.
[19] On 6 October 2016 Northwest settled its purchase of 81 Nobilo Road. Northwest obtained ANZ bank funding to do so. Northwest then commenced subdivision works for the construction of the roads and installation of the water and wastewater services.
[20] In October 2016 the defendants signed a Deed of Authority entitling Sanli to act on their behalf as if Sanli were the owner of 77 Nobilo Road, but subject to an indemnity in the defendants’ favour “for any liability for costs that [the defendants] might incur as owner of the Property and which are incurred as a result of [Sanli’s] actions”. Around that time, Mr Li of Sanli told Mr Sun that the defendants had given the purchaser of 77 Nobilo Road a power of attorney, which Mr Sun understood to mean that the defendants had authorised their purchaser to act as their agent.
[21] On 15 March 2017 Northwest notified Mr Li, Ms Yao and Mr Jung of the share of costs of the infrastructure works applying to 77 Nobilo Road which Northwest had incurred and sought to recover as at the end of February 2017. Northwest initially assumed that the purchaser was responsible and sent the invoices to Mr Li, copying Mr Jung. However, Mr Li denied liability to pay and said that the defendants were responsible according to the Five Owners’ Agreement. In April 2017 Mr Sun of Northwest sent the invoices directly to the defendants as well as Sanli. Further invoices followed. Neither the defendants nor Sanli paid Northwest.
[22] In April/May 2017 Northwest also learned that the purchaser was not prepared to sign up to the Five Owners’ Agreement. On 8 May 2017, the due settlement date for the defendants’ sale to Sanli, Northwest lodged a caveat against the 77 Nobilo Road title relying on its easement under the Five Owners’ Agreement.
[23] On 11 May 2017 Northwest commenced the CIV-2017-404-936 proceeding seeking recovery of infrastructure costs, damages in respect of additional financing costs, and an injunction to prevent the defendants’ impending sale except in compliance with the Five Owners’ Agreement. Northwest also applied for an interim injunction similarly restraining the sale. The defendants then applied for removal of the caveat.9 On 17 May 2017 Northwest’s solicitors sent the defendants’ solicitors a deed of novation for execution.
[24] On 11 August 2017 Jagose J granted an interim injunction restraining settlement of the sale of 77 Nobilo Road unless and until the defendants had:
(i)assigned or transferred their rights and obligations under the Five Owners’ Agreement to their successor in title;
(ii)caused the successor in title to enter into a new agreement with the other parties to the Five Owners’ Agreement on the same terms as the Five Owners’ Agreement or a deed of novation of the Five Owners’
9 On 15 June 2017 Brewer J directed that this interlocutory application was deemed to be an originating application.
Agreement so that the successor in title is bound on the same terms as the defendants are bound by the Five Owners’ Agreement; and
(iii)paid any cost contribution payable under clauses 34 and/or 35 of the Five Owners’ Agreement into an escrow account on terms including no disposition without this Court’s further order and otherwise as are submitted to the Court for approval on sealing.
[25]Jagose J also refused the defendants’ application to remove the caveat.
[26] In relation to Northwest’s subdivision of its land, the survey plan had to be deposited before new titles could be issued. However, because the survey plan provided for a strip of the property at 77 Nobilo Road to vest in the Council as part of the agreed roading works for the subdivision, Northwest required the consent of the defendants and parties with interests registered against 77 Nobilo Road. Those parties included Sanli, which had registered a caveat in respect of its sale and purchase agreement.
[27] On 7 September 2017 Northwest sought the defendants’ consent to deposit of Northwest’s survey plan and sent a further deed of novation for execution. On 2 October 2017 Northwest lodged its survey plan with LINZ.
[28] On 13 October 2017 Northwest’s solicitors again sought the defendants’ consent to the survey plan. Northwest’s solicitors proposed that the defendants and Sanli give consent to deposit of Northwest’s survey plan without prejudice to their respective positions as to who was liable for the infrastructure costs.
[29]On 1 November 2017 LINZ approved Northwest’s survey plan.
[30] On 2 November 2017 Northwest commenced separate proceedings against the defendants and applied for summary judgment of its claim that the defendants give consent, and procure the consent of others with an interest on the title of 77 Nobilo Road, to deposit of Northwest’s survey plan, which LINZ required before issuing new titles. Northwest also sought an order that the defendants take steps to procure the
withdrawal of any caveat or other interest including by taking steps under s 145A of the Land Transfer Act 1952.
[31] On 8 December 2017 Auckland Council issued its certificate under s 224(c) of the Resource Management Act 1991.
[32] On 1 March 2018 the Court granted the defendants leave to join Sanli as a third party in the CIV-2017-404-936 proceeding.10
[33] On 28 March 2018 Northwest obtained a further funding facility from Pearl Fisher Capital Ltd (Pearl Fisher).
[34] On 13 July 2018 Brewer J granted Northwest summary judgment in the separate proceeding.11 Brewer J concluded that Northwest was entitled to enforce the Five Owners’ Agreement and that the defendants had chosen to enter an unconditional agreement for sale and purchase of their land without complying with clause 58. The Court made declarations that the defendants are bound by the Five Owners’ Agreement, and made orders by way of specific performance:
(a)to give their consent to Northwest’s survey plan;12
(b)to procure any person with a registered interest in 77 Nobilo Road or who has lodged a caveat or other interest that has been noted on the title to the land, including the persons named in paragraph 22 of the statement of claim dated 2 November 2017, to consent to the Survey Plan to deposit; and
(c)to take such steps as may reasonably be required, in the event that such consent should not be immediately forthcoming, to procure the withdrawal of any caveat or other interest, including the initiation and
10 Northwest Developments Ltd v Zhang [2018] NZHC 298.
11 Northwest Developments Ltd v Zhang [2018] NZHC 1736. In doing so, Brewer J decided that the separate proceeding was not an abuse of process.
12 In the meantime, Northwest had to amend its survey plan following the deposit of another neighbour’s plan. The new survey plan was approved by LINZ on 20 June 2018.
prosecution of procedures pursuant to s 145A of the Land Transfer Act 1952.
[35] On 18 July 2018 the defendants lodged an appeal against Brewer J’s judgment and applied for a stay of execution. While the stay application and appeal were still pending, Sanli consented to deposit of Northwest’s survey plan on 20 August 2018 and the defendants consented on 23 August 2018.
[36] On 27 September 2018 Northwest received notice from LINZ that titles for its subdivision had issued. Northwest gave notice that title had issued to its purchasers of lots or sections in its proposed subdivision. Settlement of these sale and purchase agreements took place in October 2018.
[37] On 6 May 2019 the Court of Appeal dismissed the defendants’ appeal against summary judgment, confirming that Northwest was entitled to sue on the Five Owners’ Agreement and that the defendants were in breach of their obligations under the Five Owners’ Agreement to consent to the survey plan.13 In relation to the defendants’ submission that order (b) went too far, the Court observed that order (c) made clear that order (b) did not impose an absolute obligation. Attempting to remove a caveat under s 145A is a step within the scope of the obligation under the Five Owners’ Agreement that might enable the plan to deposit without consent of the caveators.14
Partial resolution of the dispute
[38] On 13 February 2020, counsel for Northwest and the defendants advised that the defendants’ counterclaim in CIV-2017-404-936 would be discontinued with no issue as to costs.
[39] At the beginning of trial on 17 February 2020, Mr Burley, for the defendants, indicated that he accepted that the Court had already determined that Northwest was an assignee of the Five Owners’ Agreement. He indicated that the defendants would make admissions in respect of Northwest’s claim for infrastructure costs, but the scope of the admissions was to be finalised, particularly in relation to quantum of interest.
13 Zhang v Northwest Developments Ltd [2019] NZCA 137, (2019) 20 NZCPR 638 at [33] and [39].
14 At [47].
[40] Later during the first week of trial, the parties reached a settlement of the claims between the defendants and Sanli, which included a mechanism whereby Northwest agreed to a discharge of the interim injunction granted by Jagose J in return for undertakings so as to enable the sale and purchase of 77 Nobilo Road to settle. On 21 February 2020, I made orders by consent, including:
(a)discharge of the interim injunction;
(b)specific performance of the sale and purchase of 77 Nobilo Road;
(c)a Tomlin order staying the CIV-2017-404-980 proceeding; and
(d)discontinuance of the defendants’ third party claim in the CIV-2017- 404-936 proceeding with no order as to costs.
Northwest’s claim
[41]Northwest claims reimbursement of unpaid infrastructure costs of
$1,178,301.71 plus interest at the contractual default rate of 20 per cent per annum. This is calculated as being interest of $488,042.68 to 16 January 2020, thus totalling
$1,666,344.39 including interest to 16 January 2020, plus interest on $1,178,301.71 at 20 per cent per annum until date of payment.
[42] Northwest also claims consequential losses as a result of the delay in depositing its survey plan with LINZ and obtaining new titles. Northwest claims that titles could have issued by early February 2018 and settlement of its lot sales would have occurred on 7 March 2018 whereas they were delayed until October 2018. In this regard, Northwest claims:
(a)ANZ finance charges of $626,985.53 (reduced from $698,157.01 at trial);
(b)Pearl Fisher finance charges of $507,999.91 (reduced from $823,434 at trial);
(c)interest charges of $212,259.37 payable to the vendor of another property (Sinton Road); and
(d)fees of $36,518.40 incurred in relation to the cost of Northwest’s replacement survey plan after GSC Holdings Ltd (GSC Holdings), a successor in title to another landowner party to the Five Owners’ Agreement, lodged a plan which conflicted with Northwest’s plan.
[43] Northwest also claims solicitor and client costs pursuant to the Five Owners’ Agreement in respect of steps taken to require the defendants to pay the infrastructure costs.
[44] Northwest no longer seeks a permanent injunction following the partial resolution.
Defendants’ admissions
[45] In opening the defendants’ case, following my consent orders, Mr Burley accepted that issue estoppel arises insofar as this Court and the Court of Appeal have decided that Northwest is entitled to sue on the Five Owners’ Agreement and that the defendants were in breach of their obligations under the Five Owners’ Agreement to consent to the survey plan. He confirmed that the defendants admit liability for Northwest’s infrastructure costs of $1,178,301.71 (including GST). Interest remains disputed at least on the basis that the contractual default rate is not accepted. The defendants also dispute liability for consequential losses on causation and remoteness of damage grounds.
[46] Counsel agree that determination of which of Northwest’s costs fall within the scope of the solicitor and client costs provision in the Five Owners’ Agreement is better left to be addressed with any other issues as to costs (with affidavit evidence if necessary).
Issues
[47]Accordingly, the remaining issues to be determined now are:
(a)interest accruing for the defendants’ late payment of infrastructure costs;
(b)whether the defendants’ breach of their obligations under the Five Owners’ Agreement to consent to the survey plan caused the categories of loss claimed;
(c)whether the categories of loss claimed are too remote; and
(d)interest on any damages under the Interest on Money Claims Act 2016.
Contractual interest claim
[48] Clause 42 of the Five Owners’ Agreement provides that any party which fails to pay a sum payable under the agreement on the due date shall pay default interest on the unpaid sum calculated at 20 per cent per annum, calculated on a daily basis from the date payment was due to the date payment is made.
[49] The defendants no longer dispute that Northwest is entitled to sue on the Five Owners’ Agreement. Also, the defendants have abandoned their counterclaim and therefore any set-off based on it.
[50] In contesting this part of the claim, Mr Burley submitted that the 20 per cent default interest rate and the period for which it is claimed are both unreasonable having regard to clause 37(a) of the Five Owners’ Agreement and the prescribed eight per cent interest rate payable in respect of the costs contribution amount for the purposes of clauses 34–36 of the Five Owners’ Agreement and generally available commercial interest rates including those claimed to have been incurred by Northwest. Mr Burley submitted that there is no evidence before the Court as to how and why the 20 per cent default interest rate was prescribed in the Five Owners’ Agreement, including in respect of any discussions directly with the defendants on that critical term.
[51] I deal first with the defendants’ reference to the eight per cent interest rate in the Five Owners’ Agreement. The Five Owners’ Agreement provided for infrastructure costs contribution in different ways. There were different types of
shared infrastructure – including primary roads (the East/West Road and the North/South Road), other roading infrastructure, and water and sewage infrastructure. Some costs were shared between all five owners; others were shared only between those more directly affected.
[52] The Five Owners’ Agreement provided a mechanism for interest to accrue on some infrastructure costs incurred before reimbursement was due, for example, because the infrastructure had not yet been connected. In particular, clause 34 provided for reimbursement of infrastructure costs on the later of one year after the plan change becomes operative or one calendar month after any part of the land benefitting from that infrastructure is developed and connected to, and is able to be serviced by, the infrastructure. In relation to a costs contribution payable under clause 34, clause 37(c) provided for eight per cent interest to be payable before the due date for payment, from 20 working days after a notice is given until the due date for payment under clause 34. This recognised the cost of money during the period between the infrastructure works and the due date for payment once the infrastructure was connected. Notice of the cost incurred could be given, and the dispute resolution procedure could be initiated.
[53] However, clause 34 is subject to clause 35, which provides for reimbursement where the infrastructure has greater capacity than is required by the developing party on the later of one year after the plan change becomes operative or one calendar month after the date that the developing party has actually incurred the relevant infrastructure costs and has given the other party notice in writing of the amount which the other party is required to pay. The clause 37(c) provision for interest prior to the due date for payment does not apply to clause 35.
[54] Clause 35 explicitly applied to some infrastructure whereas in relation to other infrastructure the agreement was silent as to the application of clause 34 or clause 35. The relevant unpaid infrastructure costs on which interest is sought in this case are costs that have become due for payment under clause 35. This is evident from the admitted accrual of interest one calendar month after notice. No interest is sought for the period prior to the due date for payment under clause 37(c). The eight per cent
interest rate in clause 37(c) has no application. Once a party has failed to pay the sum due under clause 35, the 20 per cent default interest in clause 42 applies.
[55] Turning to the submission that the 20 per cent default interest rate is unreasonable, the defendants have not pleaded any affirmative defence (or sought relief such as rectification) disputing that they are bound by the relevant terms of the Five Owners’ Agreement, the effect of the contractual provision nor the default interest rate. It cannot be disputed that the defendants agreed to the terms of the Five Owners’ Agreement, including clause 42. The evidence of Mr Jung that he had no intention of developing the property does not assist. While the defendants may well have intended to sell from an early stage, and indeed they entered into an agreement to sell in May 2016, there was no evidence that their intention to sell was communicated to other parties during the negotiation of the Five Owners’ Agreement let alone evidence that the terms of the agreement relating to shared infrastructure costs somehow would not apply to the defendants. Extrinsic evidence as to how and why the default interest rate was included, and of discussions between the parties including the defendants about the default interest rate, is unnecessary.
[56] Mr Burley relied on the statement of Toogood J in Commerce Commission v Sportzone Motorcycles Ltd (in liquidation):15
To be reasonable, the cost the creditor seeks to recover must be sufficiently close and relevant to the establishment of the particular loan, to the administration and maintenance of the particular loan, or to the actual consequences of the particular default, such that it can reasonably be said that the cost was incurred in connection with or in relation to the relevant matter.
[57] However, that case concerned the reasonableness of a fee under the Credit Contracts and Consumer Finance Act 2003 and in particular the required nexus between a cost and a fee given the terms “in connection with” and “in relation to” in that statute. Toogood J drew on the test stated by Savage J in Yurjevich v Commissioner of Inland Revenue which concerned the statutory words “incurred in connection with” in the context of the deductibility of expenditure incurred by a taxpayer. Those cases have no application here.
15 Commerce Commission v Sportzone Motorcycles Ltd (in liq) [2013] NZHC 2531, [2014] 3 NZLR 355 at [66], adopting a test from Yurjevich v Commissioner of Inland Revenue (1991) 16 TRNZ 118 (HC).
[58] Perhaps conscious that it was not pleaded, Mr Burley’s written submissions did not explicitly claim the 20 per cent default interest rate was an unenforceable penalty, but he did refer to the Court of Appeal decision in Wilaci Pty Ltd v Torchlight Fund No 1 LP (in receivership),16 and stressed that the appropriate outcome on a case-by- case basis will be determined by the specific commercial context in which the parties have been operating. But orally, Mr Burley’s unreasonableness submission was that the 20 per cent default interest rate was a penalty. He went so far as to propose substituting a 10 per cent default interest rate.
[59] Mr Fisher, for Northwest, did not take the pleading point that the defendants had not raised an affirmative defence of unenforceable penalty, responsibly acknowledging that Northwest was not prejudiced. But he submitted that the onus remained on the defendants to adduce evidence to support a penalty claim.17
[60] Following Wilaci, and more recently 127 Hobson Street Ltd v Honey Bees Preschool Ltd,18 the primary test in New Zealand for whether a late payment fee is an unenforceable penalty is the disproportionality test.19 It may be cross-checked by the punitive purpose test – they are two sides of the same coin.20 Thus, the question here is whether the 20 per cent default interest rate imposes a detriment on the defendants out of all proportion to any legitimate interest of Northwest in enforcement of the primary obligation to pay their share of infrastructure costs.
[61] As Mr Fisher submitted, a party asserting that a contractual provision is an unenforceable penalty bears the onus.21 However, the issue of whether a contractual clause is an unenforceable penalty is primarily a question of construction. As the Court of Appeal said in Wilaci, and again in Honey Bees:22
16 Wilaci Pty Ltd v Torchlight Fund No 1 LP (in rec) [2017] NZCA 152, [2017] 3 NZLR 293.
17 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 (CA) at 1447.
18 127 Hobson Street Ltd v Honey Bees Preschool Ltd [2019] NZCA 122, [2019] 2 NZLR 790.
19 At [29]-[35].
20 At [36]-[38].
21 Robophone Facilities Ltd v Blank [1966] 1 WLR 1428 (CA) at 1447.
22 Wilaci Pty Ltd v Torchlight Fund No 1 LP (in rec) at [8]; and 127 Hobson Street Ltd v Honey Bees Preschool Ltd [2019] NZCA 122, [2019] 2 NZLR 790 at [4].
Admissible matrix evidence must therefore concentrate on facts that shed light on the nature of the parties’ legitimate commercial interests and relevant transactional risks – including risk of loss of capital, collateral and reputation. This exercise focuses on the [promisee], but takes into account also the interests of the [promisor].
[62] The relevant evidence indicated that parties to the Five Owners’ Agreement who incurred infrastructure costs, including Northwest as an assignee, had a legitimate commercial interest in recovering those costs and the default interest from the other parties to the agreement, for the following reasons. The Five Owners’ Agreement was a formal commercial agreement prepared by lawyers and negotiated over a period of months. The defendants were represented by lawyers at the time – Mr Jung was unsure whether the defendants took legal advice before signing but accepted it was his moral duty and responsibility to be bound by its terms. The agreement itself contains an acknowledgment that the parties have obtained such legal advice as they consider appropriate. There was no suggestion the parties were not at arms-length.
[63] The parties were not in the business of lending money but rather at least some had borrowed to fund their purchase of the land and the development, secured against the land, as is common with property development. They were landowners looking to collaborate and share infrastructure costs to effect a private plan for commercial gain by increasing their land value. In this property development context, borrowing costs until the development is completed and proceeds are recovered could be well above bank borrowing rates, and the legitimate commercial interest extended to recovering interest reflecting such higher rates and incentivising prompt payment. That reflects the level of risk posed by development transactions and the need for projects to be progressed and expenditure to be recovered as quickly as possible. Clause 37(c) of the Five Owners’ Agreement states that the eight per cent interest is intended to offset inflation and the holding cost of money paid and is deemed to be part of the cost contribution in respect of which penalty interest will be calculated.
[64] Importantly, the benefit and obligation of clause 42 was reciprocal among the parties to the Five Owners’ Agreement. If the defendants had incurred infrastructure costs, they would have been the beneficiary of the same obligation to pay default interest. It does not matter that the defendants may subjectively have not intended to
develop the land before sale or incur infrastructure costs themselves and so benefit from the obligation.
[65] The evidence that the defendants were not property developers is of little assistance in this context. Mr Jung and Mr Zhang both described themselves as company directors although in evidence Mr Zhang emphasised he was a vegetable grower and had retired. In any event, they were landowners and property investors. They both had apparent commercial experience, and were no doubt looking for commercial gain by selling the land, whether before the subdivision development proceeded, as occurred, or otherwise. Despite not speaking English as a first language, they both appeared to have a good understanding of the plan change and its effect on the realisable value of the land in the Huapai Triangle.
[66] I am far from persuaded that the 20 per cent default interest rate imposes a detriment on the defendants that is out of all proportion to Northwest’s legitimate interest in enforcing the defendants’ primary obligation to pay their share of the infrastructure costs. As a cross-check, I also do not consider the predominant purpose of this secondary obligation is to punish the promisor(s) rather than protect the legitimate interest of the promisee(s) in performance of the primary obligation. For these reasons, I consider there is no basis to conclude that the 20 per cent default interest rate in clause 42 is an unenforceable penalty.
[67] The remaining issue is whether there is any basis to adjust the period over which interest is payable. Mr Burley submitted that the parties were involved in complex High Court and Court of Appeal proceedings which involved a genuine dispute in the defendants’ view based on legal advice from their former solicitors over the enforceability of the Five Owners’ Agreement, and that the defendants genuinely considered that the Deed of Authority signed between them and Sanli was for the purpose of assigning liability of the now admitted infrastructure costs to Sanli, and therefore sought to make payment of the invoices Sanli’s responsibility, with that matter not being finally determined until the Court of Appeal judgment delivered on 6 May 2019. Mr Burley submitted that the delay in payment was not the result of any deliberate action or omission of the defendants that they did not genuinely consider was disputed.
[68] I do not accept that the default interest rate ceased to apply because there was a dispute. No issue of causation or remoteness arises. Contractual interest does not cease to accrue just because a party disputes that it is payable, genuinely or otherwise. Even if there had been evidence to support the submission that the defendants’ view was based on legal advice, including to explain non-payment after the Court of Appeal decision on 6 May 2019, by refusing to pay the infrastructure costs the defendants took the risk that they were liable to pay. To avoid default interest accruing, or minimise its effect, they could have paid under protest and/or sought some arrangement to have the funds held in an interest-bearing bank account.
[69] I consider that Northwest is entitled to recover interest in accordance with the contractual provision including the default rate of 20 per cent per annum calculated on a daily basis. The defendants led no evidence disputing Northwest’s calculation. It is based on interest commencing to accrue 20 working days after the date of each notification of infrastructure costs incurred. I conclude that Northwest is entitled to contractual interest as sought.
Damages for consequential losses – causation and remoteness
[70] I turn to Northwest’s claim for consequential losses resulting from the delay in depositing its survey plan with LINZ, obtaining new titles and settling its sales. Northwest claims that the defendants’ refusal to consent before 23 August 2018 caused Northwest delay in settlement of its lot sales from early March 2018 until October 2018.
[71] The defendants accept that Northwest attempted to obtain their consent for deposit of Northwest’s survey plan from September 2017 but were unable to do so. In November 2017 Northwest commenced summary judgment proceedings seeking the defendants’ consent, which the defendants opposed. Even after Brewer J granted summary judgment, the defendants appealed and applied for a stay, before consenting on 23 August 2018. Mr Jung said he gave his consent form for the defendants about a month earlier, but it was not communicated. I accept that on 10 August 2018 the defendants made an application under s 145A of the Land Transfer Act 1952 to lapse
Sanli’s caveat. On 20 August 2018 Sanli consented to deposit of Northwest’s survey plan.
[72] Mr Burley submitted that during the relevant period between December 2017 and August 2018 substantial proceedings were initiated and pursued by Northwest which involved a dispute over the enforceability of the Five Owners’ Agreement and directly contributed to the delay in the defendants’ compliance with the Five Owners’ Agreement. He also noted that Sanli provided consent only three days prior to the defendants in August 2018, with Northwest taking no action against them.
[73] In terms of causation, Mr Burley submitted that the delay in submitting plans, obtaining relevant consents and title issue was also dependent on Council processes, obtaining caveator consents and the like, such that there was no guarantee that the developed lots at 81 Nobilo Road would have been ready for sale and sold as claimed by Northwest. He submitted it is unreasonable for the defendants to be required to pay the damages claimed for a delay of eight to ten months that was not entirely of their making; the consequential losses were not the exclusive result of the defendants’ conduct. He noted there was no expert evidence as to when the subdivided lots would have sold and at what price if the defendants had consented earlier.
[74] The test for causation is an effective, not exclusive, cause.23 A plaintiff need not show that the counterfactual absent breach was guaranteed. Mr Kent-Johnson, a registered professional surveyor who acted for Northwest, gave evidence that from 8 December 2017 the only thing holding up issue of the requisite titles was the failure of the defendants providing their consent and to procure consent from the registered caveators. The evidence indicated that if the defendants had complied with their contractual obligations, Northwest would likely have lodged the documents required for the survey plan to deposit soon after the s 224 certificate was issued on 8 December 2017. LINZ would then likely have notified the revised survey plan by early February
23 See County Ltd v Girozentrale Securities [1996] 3 All ER 834 (CA). See also Bryne v Rose [2019] NZHC 273 at [232], citing Symrise AG v Baker & McKenzie [2015] EWHC 912 (QB) at [58], which approved the following passage in Chitty on Contracts (31st ed, Sweet & Maxwell, London, 2012) vol 1 at [26-067]: “Two causes. If a breach of contract is one of two causes, both co- operating and both of equal efficacy in causing loss to the claimant, the party responsible for the breach is liable to the claimant for that loss. The contract-breaker is liable so long as his breach was ‘an’ effective cause of his loss: the court need not choose which cause was the more effective.”
2018. Northwest would then have notified purchasers that settlement was due – approximately 80 per cent of purchasers (by value) had 10 working days’ notice and 20 per cent had 20 working days’ notice. Thus, settlement would have occurred over that period and Northwest would have received sufficient funds to repay its loan to ANZ. Northwest’s claim is conservatively calculated allowing 20 working days for all settlements. Also, Northwest acknowledged that in February 2018 it would still have needed funds from ANZ to fund its separate purchase of Sinton Road, but I accept that the defendants’ delay led ANZ to withdraw its offer to fund Sinton Road, making alternative funding necessary.
[75] I am satisfied on the evidence that the defendants’ refusal to consent to Northwest’s survey plan to be deposited from September 2017 until August 2018 was an effective cause of the delay encountered by Northwest in obtaining new titles, and was an effective cause of the delay in obtaining proceeds of sale of Northwest’s lots from early March 2018 to October 2018. Sanli’s role, its caveat and its own delay in consenting do not negate this or amount to an intervening cause. The defendants’ dispute with Sanli arose because the defendants apparently entered into an unconditional agreement for sale and purchase of their land without complying with clause 58 of the Five Owners’ Agreement. As Brewer J’s judgment made clear, the defendants were required to take steps to procure the withdrawal of Sanli’s caveat. I do not infer that if the defendants had consented earlier and taken steps to procure Sanli’s consent as required, the delay would still have occurred. Also, whether or not the defendants followed legal advice, they opposed Northwest’s summary judgment application, and I do not accept the argument that the period before judgment had nothing to do with them. Finally, no expert evidence was required as to when the subdivided lots would have sold and at what price if the defendants had consented earlier. The lots were under contract – only their settlement was delayed. The claim was not complicated by lost sales at different prices.
[76] In terms of remoteness, Mr Burley submitted that it could not have been foreseeable by the defendants that:
(a)the subdivisional lots of 81 Nobilo Road would be sold during the period contended by Northwest;
(b)that Northwest would need associated second tier funding relating to those sections;
(c)that Northwest would fail to settle on the Sinton Road property; nor
(d)that GSC Holdings would deposit its plan first and this would cause Northwest to incur costs for a replacement plan.
[77] He further submitted that the duty of care would not have gone so far as to require the defendants to pay consequential costs claimed by Northwest as there was no deliberate attempt by the defendants to cause losses to Northwest.
[78] Dealing with this last submission first, a deliberate attempt by the defendants to cause loss is not required. Nor is actual notice of the specific consequences following breach, which the defendants submitted was not given to them in their native language. In claims for interest as damages, here interest and other finance charges incurred by Northwest, the ordinary rules as to remoteness of damages in breach of contract cases from Hadley v Baxendale apply, as the Court of Appeal said in Clarkson v Whangamata Metal Supplies Ltd.24 After quoting the well-known statement from Hadley v Baxendale, the Court of Appeal summarised the law:25
Thus Alderson B articulated two possible grounds (or “limbs”) upon which plaintiffs could stake their claim: (1) loss reasonably considered to arise naturally from the breach of contract; and (2) loss that could reasonably be supposed to have been in the specific contemplation of the parties when they contracted. In Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 (CA) at p 539, Asquith LJ distinguished the two limbs as follows. The first limb is dependent on foreseeability of loss arising from knowledge that is imputed to the parties (because they are assumed to have knowledge of the ordinary course of things). The second limb is dependent upon knowledge that, it can reasonably be supposed, the parties actually possessed of matters outside the ordinary course of things.
24 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590, [2008] 3 NZLR 31 at [25], referring to Hadley v Baxendale (1854) 9 Exch 341.
25 At [26]. See also Koufos v Czarnikow Ltd [1969] 1 AC 350 (HL). I keep in mind as well the warning in McElroy Milne v Commercial Electronics Ltd [1993] 1 NZLR 39 (CA) at 45, that the test in Hadley v Baxendale should not be regarded as a statute.
[79] It is also clear since Clarkson that interest may be claimed as damages under either limb of Hadley v Baxendale,26 and that interest claimed may include compound interest, if it satisfies the normal remoteness test in Hadley v Baxendale.27
[80] I note that, since Clarkson, Lord Hoffmann and Lord Hope in the House of Lords formulated an alternative test of assumption of responsibility for unusual cases, in Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas).28 It may make no difference in a case like this but unless and until that reformulation has been endorsed by the appellate courts in New Zealand, I apply the test according to Clarkson.
[81] In assessing the defendants’ submissions, I apply these principles and determine whether the loss in question is prima facie recoverable, and then consider any other factors which may operate to defeat the claim to it. As Henry J said in Herbison v Papakura Video Ltd (No 2):29
…it is essential to confine attention to the breaches in question, to see whether they have led to the losses in question and if so whether the rules as to remoteness are infringed.
This is all in the context of assessing the contractual measure of damages, that is putting the plaintiff in the position as if the contract had been performed.30
[82] I consider that Northwest’s loss comprising Northwest’s increased ANZ bank borrowing costs arising from the delay in the sale of its lots is loss arising naturally, that is in the usual course of things within the first limb of Hadley v Baxendale. Mr Burley could not really suggest otherwise. I have already referred to the commercial context of the Five Owners’ Agreement in relation to the contractual interest claim above.31 Bank borrowing by parties to the agreement to fund their land purchase in the Huapai Triangle and development costs was reasonably foreseeable,
26 Clarkson v Whangamata Metal Supplies Ltd [2007] NZCA 590, [2008] 3 NZLR 31 at [27]-[36], following Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners [2007] UKHL 34, [2008] AC 561.
27 At [49]. See for example Pegasus Group Ltd v QBE Insurance (International) Ltd HC Auckland CIV-2006-404-6941, 1 December 2009 at [255].
28 Transfield Shipping Inc v Mercator Shipping Inc (The Achilleas) [2008] UKHL 48, [2009] 1 AC 61.
29 Herbison v Papakura Video Ltd (No 2) [1987] 2 NZLR 720 (HC) at 730.
30 At 731 and 732.
31 At [62]-[65] above.
whether parties incurred development costs themselves or became liable to reimburse others under the agreement. This is irrespective of whether the defendants lacked the sophistication and property development experience of some other parties to the Five Owners’ Agreement. Mr Jung and Mr Zhang borrowed to fund their purchase. Assignment was expressly provided for in the Five Owners’ Agreement and so was reasonably foreseeable, and I accept that such borrowing by an assignee was also reasonably foreseeable. So was the fact that delay before lots could be sold would lead to the debt not being retired and hence increased borrowing costs. Mr Jung and Zhang acknowledged that in a subdivisional development developers get a return on investment when they sell the lots and the sooner they do so the sooner they can repay borrowing and make money. As Mr Zhang acknowledged, delays cost money. I will return to the alleged failure to mitigate below.
[83] I also consider that second tier or other funding at higher rates was also reasonably foreseeable and naturally arising in the circumstances such that the increased borrowing costs paid to Pearl Fisher and the Sinton Road vendor are not too remote. Mr Jung acknowledged that in property development second tier lending is quite normal. He also borrowed from a second tier lender, albeit in 2018. Northwest was not required to notify the defendants of its specific funding arrangements in advance. I note Northwest’s claim appropriately adjusts for the funding costs that would have been incurred with ANZ if the defendants had complied with their contractual obligations and the alternative funding were not required.
[84] However, the consultant’s fees revising the survey plan were the result of the action of a third party lodging a plan (GSC Holdings). While these fees would not have been incurred ‘but for’ the delay, and because the development involved subdivision of each parties’ land it was arguably foreseeable that a delay would lead to one landowner overtaking another with the deposit of its plan, I am doubtful whether these additional fees were caused by the defendants’ breach and whether this type of loss was either reasonably foreseeable or reasonably in specific contemplation. I am not satisfied these fees are recoverable from the defendants.
[85] Mr Burley also submitted that Northwest failed to mitigate and contributed to its own losses:
(a)It did not invoke the dispute resolution provisions in the Five Owners’ Agreement. Northwest issued summary judgment proceedings in November 2017, six months after it knew about the critical dispute between the defendants and Sanli. Mr Burley submitted that if Northwest had initiated the dispute resolution procedure, a better or different resolution would have been obtained.
(b)The interest payments and charges incurred by Northwest are grossly excessive and a reasonable person would have shopped around for more attractive and less costly financial terms.
(c)It failed to obtain insurance.
[86] Failure to mitigate is also an affirmative defence. It must be pleaded. Mr Burley acknowledged the defendants did not do so but submitted these matters were at least relevant to causation and remoteness, which I have already addressed. I nevertheless consider them in terms of mitigation. There was little evidence to support the allegations. Mr Burley accepted that the burden of proving such failure rests upon the defendants once the plaintiff has established the normal measure of damages.32 The test is whether Northwest acted reasonably, in the circumstances of the case.33
[87] As to the dispute resolution procedure, it is accepted that Northwest did not invoke it. It was not required to do so insofar as it applied to the Court for urgent relief in May 2017. The position may have been different with its summary judgment proceedings commenced in November 2017, but the defendants chose to defend those proceedings rather than seek to enforce the dispute resolution procedure. In any event, there was no evidence to support the contention that a better or different resolution would have been obtained.
[88] As in the 20 per cent default interest rate context, there was little evidence to support the defendants’ contention that the interest payments and charges incurred by
32 Williams v K F Meates & Co Ltd (1981) 1 NZCPR 594 (CA) at 599.
33 Hooker v Stewart [1989] 3 NZLR 543 (CA) at 547.
Northwest were grossly excessive and a reasonable person would have shopped around for more attractive and less costly financial terms. There was no evidence to undermine the reasonableness of the ANZ charges. In a simplistic comparison between the Pearl Fisher charges and the second tier finance charges incurred by Mr Jung also in 2018, Pearl Fisher’s charges compared favourably – except for the establishment fee, which was considerably higher. Mr Fisher submitted that is understandable given the uncertainty the financier was facing with the pending summary judgment. He also responsibly drew my attention to Compania Financiera v Hamoor Tanker Corporation (‘The Borag’),34 where wholly unreasonable finance charges were found to be unrecoverable. Whether considered in terms of causation, remoteness or failure to mitigate, in this case I do not consider the finance charges incurred by Northwest were unreasonable. Having found that financing, including second tier financing, was foreseeable, I consider the defendants’ complaint is properly characterised as a failure to mitigate carrying at least an evidential onus on their part to show that Northwest’s borrowing costs were unreasonably high. I do not consider Northwest failed to mitigate in relation to the finance costs incurred.
[89] The reference to insurance only arose in submissions and there was no evidence to support a failure to mitigate.
[90] Mr Burley further submitted that claiming 20 per cent interest under the Five Owners’ Agreement and the interest charged by ANZ amounted to a ‘double dip’ by Northwest. I do not accept this submission. I accept that neither expectation nor reliance losses allow a plaintiff to recover more than its actual loss, but that is not the result here. The default interest applies to the failure to reimburse the defendants’ share of the infrastructure costs incurred by Northwest as they became due for payment, beginning in April 2017. The borrowing costs claimed as damages relate to the borrowing needed to cover the cost of the property for the period from March to October 2018 before lots could be sold, caused by the defendants’ refusal to consent to the survey plan. These are distinct costs. Northwest’s borrowing had to cover both. Even if an issue of overlap could arise, as Mr Fisher submitted, it was not put to
34 Compania Financiera v Hamoor Tanker Corporation (‘The Borag’) [1981] 1 WLR 274 (CA) at 285.
Mr Sun and I do not infer that if the infrastructure costs had been paid when due, Northwest would have applied the payment to reduce the ANZ debt.
[91] Finally, I note that the defendants’ evidence complained that Northwest acted unreasonably, and intentionally to damage the defendants, in particular by lodging a caveat in May 2017. Mr Jung said that the caveat meant the defendants did not receive the purchase price from Sanli, which was 10 times more than Northwest was owed. I do not consider Northwest acted unreasonably but, in any event, as the defendants abandoned their counterclaim against Northwest and resolved their dispute with Sanli (including over the delayed settlement), those complaints are not relevant to the issues remaining in dispute between Northwest and the defendants.35 Northwest’s caveat preceded the defendants’ failure to consent to deposit of Northwest’s survey plan from September 2017 and thus is not relevant to the alleged failure to mitigate, which I have already addressed. Those complaints do not operate to defeat Northwest’s claim to recover losses resulting from the defendants’ breach of the Five Owners’ Agreement.
Interest on damages under the Interest on Money Claims Act 2016
[92] Northwest also seeks interest on any damages under the Interest on Money Claims Act 2016. Mr Burley submitted this is also a ‘double dip’ given the claim for contractual interest. For the reasons already given, I consider the contractual interest and damages claims to be distinct. Northwest needed to cover both shortfalls. Statutory interest is consequential on the damages claim.
[93] Having established damage, Northwest is entitled to interest on damages in accordance with the Interest on Money Claims Act 2016. As Mr Fisher acknowledged, in a case where the amount on which interest is to be awarded was not quantified at the day on which the cause of action arose, s 9(1)(a)(ii) of that Act requires the Court to specify the day on which the amount was quantified.
35 Further, Mr Jung’s allegation that Northwest acted to damage the defendants after Sanli disclosed it was not in a position to settle was not put to Mr Sun. Also, despite the settlement, Mr Jung and Mr Zhang sought to give evidence on the issue between the defendants and Sanli as to whether Sanli knew of the Five Owners’ Agreement. Sanli was not a party to the summary judgment proceeding and so was not bound by Brewer J’s judgment. Before their settlement, Mr Crossland for Sanli indicated in opening that Sanli contested Brewer J’s statement that Sanli entered into its contract knowing of the Five Owners’ Agreement.
[94] Mr Fisher submitted that Northwest first quantified its damages claims in its amended statement of claim filed and served on 28 November 2018. The basis for the quantification of that claim has not changed except for a reduction in the ANZ and Pearl Fisher charges at the beginning of the trial to take account of the likelihood that Northwest would still have needed to borrow some funds to settle the purchase of the Sinton Road property.
[95] Mr Fisher submitted that for the purpose of s 9(1)(a)(ii) a claim is quantified when the plaintiff notifies the defendant of all relevant particulars of the claim. He noted that r 5.32 of the High Court Rules 2016 requires a statement of claim to state the amount sought as precisely as possible. He submitted that if a plaintiff has fulfilled its obligations under r 5.32, it would be difficult to argue that it has not quantified the claim for the purpose of s 9(1)(a)(ii). He submitted that given the reality that the amount awarded by the Court on claims for damages often differs from the amount sought by a plaintiff in its statement of claim as a result of the testing of evidence that occurs in the trial process, the legislature cannot be taken to have intended that there would be no pre-judgment interest awarded in cases where the amount claimed by the plaintiff in its pleading differs from the precise amount awarded by the Court. He submitted that s 9 calls for a sensible and robust construction.
[96] Where the amount on which interest is to be awarded was not quantified at the day on which the cause of action arose, s 9(1)(a)(ii) requires the Court to specify in the judgment a later day as the date at which the amount was quantified. That enables the Court to assess when in fact the amount was quantified. I accept Mr Fisher’s submission that the statutory provision calls for a sensible construction and does not require the quantification to match exactly the amount ultimately awarded. But there may well be cases where an initial attempt at quantification is not treated as the relevant date of quantification, for example where new heads of damage are added later or the quantification is otherwise inadequate. I do not attempt to set out a hard and fast rule in the abstract.
[97] Here, I accept that the amount of Northwest’s damages was quantified in its pleading on 28 November 2018 notwithstanding that the amount now awarded is a lesser sum. I specify that date as the date at which the amount was quantified.
Result
[98] Northwest is entitled to judgment against the defendants jointly and severally for:
(a)infrastructure costs of $1,178,301.71;
(b)default interest of $488,042.68 to 16 January 2020;
(c)default interest on $1,178,301.71 from 16 January 2020, calculated on a daily basis at the rate of 20 per cent per annum, until date of payment;
(d)damages of $1,347,244.81 (comprising ANZ finance charges of
$626,985.53; Pearl Fisher finance charges of $507,999.91; and Sinton Road finance charges of $212,259.37);
(e)interest on $1,347,244.81 from 28 November 2018, calculated at the relevant interest rates on a daily basis using the Internet site calculator in accordance with the Interest on Money Claims Act 2016.
Costs
[99] Having largely succeeded in its claim, Northwest is entitled to costs against the defendants in the CIV-2017-404-936 proceeding, subject to any agreement as to costs in the partial resolution. As indicated, Northwest claims solicitor and client costs pursuant to the Five Owners’ Agreement in respect of steps taken to require the defendants to pay the infrastructure costs.
[100] If costs (including the necessary apportionment) cannot be agreed, Northwest is to file a memorandum (not exceeding five pages) together with an affidavit addressing the indemnity costs claim within 20 working days. The defendants are to
file a memorandum in response (not exceeding five pages) together with any affidavit addressing the solicitor and client costs claim within 20 working days thereafter.
[101] I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.
Gault J
Solicitors / Counsel:
Mr M J Fisher and Mr J J Yoon, Barristers, Auckland
Mr C Girven (instructing solicitor for the plaintiff in CIV-2017-404-936), Castle Brown, Auckland Mr J Burley and Ms S Pala, McVeagh Fleming, Auckland
Mr K J Crossland and Mr J K Boparoy, Shieff Angland, Auckland
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